Luxury real estate markets where cash deals are the norm – Fox Business

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Cash offers for residential real estate surged last year as more affluent buyers opted against taking on a mortgage in order to avoid high interest rates. But in some luxury markets, cash deals for high-end homes are just the typical way of doing business.

“The rise in mortgage rates has certainly lent a hand in the rise of all-cash deals as of late,” Sotheby’s President and CEO Philip White, Jr., told FOX Business. “But, in many of our luxury markets around the world, all-cash deals have historically been the norm – and the preference for buyers and sellers hoping for a quick and quiet sale.”


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Sotheby’s International Realty’s recently-released 2024 Luxury Outlook Report reveals some of the key markets around the globe where cash has always been king.

Dubai, United Arab Emirates

Baccarat Hotel and Residences, Burj Khalifa Area, Dubai, United Arab Emirates  (Noe & Associates / Fox News)

Sotheby’s reported that all-cash deals have been the rule rather than the exception in Dubai for quite some time, but the city on the Persian Gulf has still seen a marked increase in cash purchases over the past two years.

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“It’s common for ultra-high-net-worth individuals who choose to buy here to purchase in all cash,” said Honey Deylami, executive partner at Dubai Sotheby’s International Realty. “It’s very rare that ultra-high-net-worth individuals look for a mortgage for their primary or vacation homes.”

Cape Town, South Africa

aerial view of Cape Town

Cape Town, South Africa (iStock / iStock)

According to Claude McKirby, owner and director of Lew Geffen Sotheby’s International Realty, roughly 70% of luxury real estate purchases in Cape Town are all-cash deals.

“Cape Town is one of the most desirable places to live, and with the exchange rate in favor of foreign buyers and our prime lending rate at a 14-year high of 11.75%, all of our residential sales to foreign buyers are cash,” explained McKirby.

New York City

The New York City skyline

The Manhattan skyline is seen at sunrise from the 86th floor observatory of the Empire State Building on April 3, 2021, in New York City.  ((Photo by ANGELA WEISS/AFP via Getty Images) / Getty Images)

Lisa Larson, an associate broker for Sotheby’s, says during the third quarter of 2023, 57% of the homes sold for over $5 million in New York City were cash deals and a majority of those over $10 million were cash, too.

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She added that for new developments in the Big Apple, “cash is the only option to secure the deal.”

“With interest rates rising and the stock market and economy in flux, New York City real estate is an attractive place to invest for luxury buyers who are very liquid and sitting on excess cash,” Larson said.

Hong Kong

Hong Kong skyline

A view of the Hong Kong skyline. (iStock / iStock)

Despite increased government scrutiny on cash deals in Hong Kong, cash purchases are still preferred by sellers in the China-controlled financial center.

Franky Cho, chief operating officer of List Sotheby’s in Hong Kong, said that “in most cases, [purchasers] buy these luxury properties under separate company entities for easier management and flexibility for the next transaction. It creates an extra layer of privacy.”

He explained that some high-end buyers in Hong Kong will take out mortgages for 10% of the purchase price rather than make an all-cash purchase, because cash transactions are subject to probes from the government over money-laundering concerns.

“The government will have less concern if there is a mortgage, which implies the source of money is checked by banks that approved it,” Cho said.

Montecito, California

Montecito California

Beachfront homes line Miramar Beach in Montecito in Santa Barbara County on the Central Coast of California. (Nik Wheeler/Corbis via Getty Images / Getty Images)

While the percentage of cash deals jumped nationwide due to high interest rates, Montecito did not see much of a change in such transactions last year because the city has traditionally been an all-cash market across all price points.

Maureen McDermut, a global real estate advisor at Sotheby’s Montecito brokerage, said cash deals made up 47% of the residential transactions in September of last year, and 39% in October. She said those numbers are pretty much on par with trends for those months going back several years.

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“The more expensive the home, the larger the percentage of cash deals,” McDermut said. “It’s part of the normal buying process here.”

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